The newspaper reports at the weekend about clothing factories in Leicester were shocking. The exposé found that workers “making clothes destined for the fashion giant Boohoo are being paid as little as £3.50 an hour, an undercover Sunday Times investigation has found”. Working conditions weren’t good either, with limited social distancing and staff not wearing masks.
A Financial Times report in 2018 covered similar ground, with the suggestion that everyone knew this was going on – local and national government, Public Health England and others – but no-one had the desire to do something about it. Of course, we don’t know whether “modern slavery” was involved here, or whether some workers in factories like those in Leicester may be “independent” illegal immigrants, as it were, or they may be claiming benefits and working illegally on the side. (If they were legitimate, it is most unlikely they would work for £3.50 an hour, as they would be better off unemployed and claiming benefits).
For all the recent attention being paid to the historical slave trade, the shocking fact is that there are reckoned to be more victims of “modern slavery” today in 2020 than the entire number of people transported from Africa in the slave trade. A headline in the Guardian in 2019 was truly shocking. “One in 200 people is a slave. Why?” The lengthy article, from Kate Hadal, actually had an even more shocking secondary headline, which was this – “Slavery affects more than 40 million people worldwide – more than at any other time in history”. That current-day figure compares to best estimates that about 12 million slaves entered the Atlantic trade between the 16th and 19th century, but about 1.5 million died on board ship, so 10.5 million slaves arrived in the Americas.
Whether there are elements of modern slavery invovled here or not, the issue has certainly hit online retailer Boohoo with the firm’s share price down 20% on Monday July 6th, representing a loss in market capitalisation of no less than £700 million. Boohoo has said that it will “investigate one of its suppliers following reports that staff are earning less than the minimum wage amid unsafe working conditions”. And the National Crime Agency confirmed it was investigating Leicester's textiles industry over allegations of exploitation, although it did not comment on Boohoo specifically.
To be honest, the cynic in me finds it unlikely that Boohoo and other retailers really don’t know what is going on in their supply chain. And if they don’t know, then they should. Some pretty basic supplier management processes and actions should have been able to identify these issues.
Now it may be that this will be short term hit for the firm, but to lose over £700 million in shareholder value in 24 hours does demonstrate pretty convincingly that this whole “procurement with purpose” issue is much more than just business people wanting to feel good about themselves. If you don’t pay attention to these key reputational issues, it can hit the business quickly and severely.
To speak personally for a moment, some readers may have wondered why I’m currently pursuing two aspects of procurement, two angles that seem to be very different. This case provides the perfect answer. It demonstrates all the negatives of “Bad Buying”, which is the topic of my book to be published by Penguin Business in October. But it also emphasises the importance of procurement with purpose thinking. It is yin and yang, really. There are aspects of “bad buying” that are nothing to do with the “purpose” agenda, of course, but the relationship between the two topics can often be close, as it is in this case. Boohoo and others would benefit from a lot more purpose in how they conduict themsleves, we mgiht suggest, and a lot less bad buying. And if we can achieve both those aims more generally, then procurement and the contribution it makes to our organisations will be much stronger.